It’s complicated

A recent report notes that 39% of the world’s smokers hail from India, a number the Indian government is anxious to reduce.  To do so, it has increased taxes on cigarettes precipitously, a move that has worked to disincentive smokers in other countries.

For instance, the article notes that the US increased cigarette taxes by 320% from 1996 to 2013, a period in which the number of adult smokers fell by almost one third.  Nothing is uncomplicated in India though, where the government has increased taxes by “1606% on the shortest non-filter cigarettes available and 198% on the shortest filter cigarettes since 1996.”  Nowadays, the tobacco tax makes up “about 60% of the price of a best-selling pack of 20 cigarettes, against about 43% in the US.”

and, the grand result was that “cigarette smokers in India increased from 25 million to 46.4 million over 14 years.”  So what went wrong?

One of the answers is that India is getting richer.  The article notes that “cigarettes were 175% more affordable in 2011 than in 1990, and tobacco has become 5% more affordable in India since 2008.”  That’s a good problem to have–in essence the government can’t raise taxes fast enough to overcome the income effects.

The second answer can probably be gleaned in the quote above about the tax increases.  Until 2014, India had 7 different taxes on tobacco, depending on how long the cigarette is and whether it had a filter.  Now they have only 6!  The WHO rightly argues that the tax structure is “complicated and, therefore, difficult to administer.”  I would add that it is ripe for corruption too.  It reminds me of when Argentina had 8 different external tariffs, a situation that not surprisingly led to massive problems with corruption.

Indian cigarette manufacturers are more than able to play the tax game.  When taxes increased across the board to 72% in 2014, “consumer giant and cigarette market leader ITC to shorten the length of its cheapest brand, Bristol, to keep prices and sales intact.”  A reduction of cigarette length by 5 mm allowed them to keep prices the same.  Well played ITC!

The Long-Term Effects of Protestantism

I just came across a couple of interesting new working papers on the historical effects of Protestantism.  The first builds on Robert Woodberry’s work on the effect of the printing press in Sub-Saharan Africa. In “The LongTerm Effects of the Printing Press in SubSaharan Africa,” Julia Cage and Valeria Rueda find “that, within regions located close to missions, proximity to a printing press significantly increases newspaper readership today” and that there is “a strong association between proximity to a printing press and contemporary economic development.”

Rossella Calvi and Federico Mantovanelli, in a paper titled “Long-Term Effects of Access to Health Care: Medical Missions in Colonial India” also find some positive long-term effects of Protestant missions, but this time in India.  They show that “a 50% reduction in the distance from a historical medical facility increases current individuals’ body mass index by 0.4.”  The path dependence “is not driven by persistence of infrastructure, but by improvements in individuals’ health potential and changes in hygiene and health habits.”

Aspirations of being a flailing state

Lant Pritchett has a working paper called “Is India a Flailing State? Detours on the Four Lane Highway to Modernization,” which is wonderful wordplay on the more commonly used failed state.  In it, he defines a flailing state as one where “the elite institutions at the national (and in some states) level remain sound and functional but that this head is no longer reliably connected via nerves and sinews to its own limbs.”

I was reminded of this new categorization when I read about the Nepalese government’s failure to spend any of the $4.1 billion donated after the earthquakes four months ago. Reuters reports that 9,000 people died in the quakes and that 10% of the population is still “living in plastic tents, preyed upon by flies and mosquitoes, with muddy paths and no drains.”  

So what has this incredibly dysfunctional government been doing instead?  First, they cannot agree on a plan of aid distribution and second, the government is spending all of its time trying to “pass a contentious constitution that will create a new political system and divide the country into new regions, a decision that has led to deadly clashes.”  I’m guessing those two points are closely related.  In short, the government is so divided that they have decided to focus on politicking and sowing political violence rather than distribute the money to the tens of thousands that desperately need it.

Makes me think that Nepal is a flailing state in its dreams. We apparently need a new category between failed and flailing.

Culture Shock, India edition

Traveling to foreign countries always involves some culture shock, but this sign from Air India really take the cake.  Is this really a problem that the company is having?  Is there a culture that eats carpeting?  I’m hoping it was a translation error, although the proliferation of English speakers in the country would make you question that.


h/t The Poke

Crazy Rich Swiss

Chinese tourists are flocking to Switzerland, and apparently it is not an unmitigated blessing to the locals, as officials are now running “special” train service up Mt. Rigi (in the Lucerne area) for “Asians”!

Not that they are racist or anything:

“Despite the special service, the Mt. Rigi railway station authority reiterated that they welcome Chinese visitors”

do go on, railway station authority:

“It also pointed out that increasing number of Chinese travelers may make the local people feel uneasy to some extent” but “the increase in the number of special trains has nothing to do with discrimination against Asian people, particularly Chinese people.”

so glad they cleared that up!


“Swiss authorities will improve the cleaning of the washing rooms and designate certain spots, including a huge stone sent from China’s Mt. Emei in July this year, for Chinese tourists to take photos.”

Oh my.

Back in my days of wandering Europe, it was the Japanese that knotted the Swiss panties. Time marches on I guess.

In the end though, I really don’t understand what all the fuss is about.

After all, the best way up Mt. Rigi is by foot!

Put a Bird On It

The first time I visited Mexico, I instantly fell in love with the bright, beautiful colors of many of the houses and commercial buildings.  I had never seen anything like it and I thought it was a wonderful expression of creativity and joy.  Apparently I’m not the only one.  The FT reports that a group called Germen Crew, an initiative by the federal government, is breathing new life into poor barrios by hiring locals to paint them in technicolor.

The article highlights the changes in a neighborhood called Las Palmitas, which only 7 years ago had no electricity.  I was wondering how the group got buy-in for the paint job, but apparently the crew “spent months getting to know residents before the painting began, attending town meetings to discuss colours and workshops for children.”  It’s important to note too that the house painting is only one leg of the program, which also includes more policing (and video surveillance cameras to fight crime), increased help to start up businesses, and funding scholarships for high school dropouts.

Gang rivals joined together in the painting initiative.  As one gang member stated, “somehow, we worked together.”  The government cites a “79 per cent drop in the crime rate in the first half of this year, compared with levels in 2012.”  I’m not sure why the comparison year is 2012 or if this can totally be attributed to the Germen crew, but you cannot argue with the visual results, which are stunning.  Check the article for more incredible photos.


There I Fixed It*

Today’s line-up of people who really don’t get it:

1.Jackson Mayor Tony Yarber of Mississippi is “encouraging citizens to pray for the city’s infrastructure, proclaiming ‘Yes….I believe we can pray potholes away.'” And sadly, this is not from The Onion!  I don’t see any problems with this strategy; it’s practically flawless.

2. Venezuelan President Maduro, who has managed to absolutely gut the economy in a few short years, is now pointing to Colombians as the real scourge.  Sounding a lot like a certain buffoon in the US, he stated:

“Who comes from Colombia to Venezuela? These are people who come with no education, without a penny in their pocket, it’s the poor who come fleeing … Venezuela has become a magnet, a guarantee for social rights for the Colombian people. I have to say it, and I ask for your understanding … I don’t offend Colombia by telling the truth, that Venezuela is hurting, because of all the poverty and the misery coming from Colombia … but aside from that, we get drug trafficking, mafias, and here we are, making sure Venezuela is a territory free of drugs, we are the victims, let’s open our eyes. And now, we are the victims of paramilitaries brought by the right, and send by Colombia’s far right.” 

Yeah, that’s right, it’s the poverty and misery from Colombia that’s dragging down the Venezuelan economy.   And deporting 800 Colombians from the border region will almost certainly solve the economic woes.

3. And now for the (unintentional) master of irony, we have first-class economy wrecker Bobby Mugabe, who yesterday proclaimed that there was “no suffering” in Zimbabwe. It’s hard to believe he could say that with a straight face.  He went on to hilariously ask “But what is it that the people are suffering from? Didn’t we give them land?”  That’s right Bobby.  Land redistribution to your cronies should have fixed everything, right?  What are these damned ingrates still complaining about?

*In honor of the very funny “There I Fixed It” Blog